Minimum wage hikes meet mixed reactions in SF

IN the diverse, densely packed city of San Francisco, known for its high living costs, 77 percent of voters last year approved a series of pay hikes that will boost San Francisco’s minimum wage to $15 an hour by 2018.

Still, tensions on Valencia Street in the Mission District remain over the recently approved statewide minimum wage hike and its effect on businesses and the ability of residents to keep up with rising costs.

As other cities, including Sacramento, ponder increases to the local wage, the stories told along Valencia illustrate the complexities of the issue. San Francisco recently increased its rate to $12.25 an hour, which started May 1st, the first of four annual wage jumps to take place under the city’s voter-approved Proposition J.

Low-wage workers are already feeling anxious, uncertain of the future in a technological-booming city with gentrified, multicultural, and downright expensive neighborhoods. They fear rents going up and the costs of owning a business to get even higher.

“I just got a raise, and I still need more,” said 56-year-old Muhammad Seikh, a Pakistani immigrant who works at an Indian restaurant on Valencia. “We love this work. We want to do it. It’s hard here, but we love this city…there’s young people coming in paying $4,000 for one-bedroom apartments. There is all this new construction, high-rises, and it is starting in the Mission (District) too.”

“My pay has gone up, but it’s not making much of a difference,” said Ana Hernandez, 43, from Mexico. “I have a little more, but we’re not able to save anything, and we have a lot of expenses. I think $15-an-hour will be better. But, by then, is everything going to cost more? Am I going to be in a safe place that I can afford?”

Across the nation, labor groups and advocates for the poor and low-income families are pushing cities to set higher local minimum wage standards. The movement has spurred discussion on rising income inequality, the opposition in Congress to raising the federal minimum wage of $7.25, and the failure of state legislatures to address surging costs of living in many areas.

In Sacramento, a task force is set to begin studying raising the city’s minimum wage above the $9 state rate, evidence that “addressing income inequality is a priority issue across California,” said Mayor Kevin Johnson.

San Francisco’s new minimum wage law, Prop. J, replaced an earlier cost-of-living standard that had boosted the city’s minimum wage from $10.74 last year to $11.05 in January.

Amy Glasmeier, an economic geographer at the Massachusetts Institute of Technology, said the uncertainty felt in the Mission District is “emblematic of economic pressures in many California communities.”

“California is a high-cost state, and you have a constrained housing supply and a large low-income population,” Glasmeier said.

As higher-income residents benefit from the economic upswing in some cities like San Francisco, many are also “invading the low-income housing stock, and that’s displacing the poor.”

An online “living wage calculator” developed by Gasmeier and MIT measures residents’ basic needs of shelter and living, including food, child care, rent, transportation, taxes and medical expenses in regions across the country. Under the formula, a single working adult in San Francisco required an hourly wage of $14.37 to meet the basic living costs in 2014. A single parent with one child at home needed $29.37 an hour. Two parents with two children each needed to pull in $17.75 an hour.

The National Low Income Housing Coalition also released similar calculations in its annual housing report, “Out of Reach,” for residents in each state. The report found that the average hourly wage needed to rent a $1,006 two-bedroom unit in the US is $19.35—or $40,240 per year. That rate is more than two and a half times the federal minimum wage, and $4 over the estimated average wage of $15.16 that renters earn nationwide, the report noted.

“There simply isn’t enough reasonably priced, decently maintained housing to meet the demand, and rapidly rising rents outpace wages,” wrote Oregon Governor Kate Brown (D) in the report’s introduction. “As a result, one out of four households spends more than half their income on housing costs.”

In the whole of California, the hourly wage that a household must earn—working full-time, at least 40 hours a week, 52 weeks a year—in order to afford the Fair Market Rent for a two-bedroom rental unit (without paying more than 30% of their income) is at least $26.65. California also has one of the largest gaps between two-bedroom housing and the renter wage, at $7.69, the report indicated.

Glasmeier, an advocate for the higher wage, also said some businesses may encounter “significant challenges,” particularly if they are operating on a financial edge or “have constructed a cost situation that is long-term not viable.”

“The tension is real for proprietors,” she said.

Some business owners feel San Francisco’s steady wage increase—to $12.25 this year, $13 in 2016, $14 in 2017, and $15 in 2018—will present an unbearable burden.

“The tens of thousands of people who are going to benefit from the minimum wage [in SF] are more important than me keeping my bookstore,” said Valencia’s Borderlands Books’ owner Alan Beatts.

“I would say, pretty much to a ‘T,’ that we are all opposed to it,” said Henry Karnilowicz, president of the Council of District Merchants, an umbrella group for business districts in the city. “At the end of the day, people are just going to have to increase their prices. That’s the long and short of it.”

Gwyneth Borden, executive director of the Golden Gate Restaurant Association, said the minimum wage law is “creating unnecessary challenges for dining establishments whose waiters get tips on top of the hourly wage. Unlike many other states, tipped workers in California cannot be paid less than the minimum wage.”

“Our concern is over giving a pay increase to tipped workers who already make well over the minimum wage,” Borden said. “San Francisco is expensive, and it’s difficult to live here.”

She said owners and employees alike are worried about “the Manhattanization of San Francisco.”

Similar concerns are stoking the broader wage hike movement across the nation. In Oakland, a 2014 measure to increase the local minimum wage to $12.25 passed with 82 percent approval, and went into effect March 2. The Los Angeles City Council voted last month to hike the minimum wage to $15 by 2020. Two dozen major US cities have raised base pay standards in recent years, including Seattle, Chicago and Washington, D.C.

“This is driving the nation,” said Shum Preston, a minimum wage advocate for the Service Employees International Union. “The 2014 votes in San Francisco and Oakland were watched very closely. There was a consensus among the population: The economy was not working, and raising the minimum wage was a great way to help people.”

“Raising the minimum wage is something that will have a widespread impact on both employers and employees, and we can’t pick a number only because it works in other cities,” said Sacramento Mayor Johnson. “We have to make sure we come up with a solution that is right [for Sacramento].”

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